Cookies on the Economic Times website

Economic Times has updated its Privacy and Cookie policy. We use cookies to ensure that we give you the better experience on our website. If you continue without changing your settings,we'll assume that you are happy to receive all cookies on the Economic Times website. However, you can change your cookie setting at any time by clicking on our Cookie Settings at any time.You can also see our Privacy Policy

China's OBOR expectations look gloomy: Expert

Chinese affairs expert Qian Benli, in an article published at the Committee for the Abolition of Illegitimate Debt (CADTM), has cited various news reports to ascertain the ill effects of OBOR, both on the domestic and international fronts.

BEIJING: With some African countries caught in a debt trap due to China's ambitious One Belt One Road Initiative (OBOR) and even Malaysia backing out of two China-backed multi-billion connectivity projects, the prospects of the trans-continent corridor project look dim, said an analyst in Chinese affairs.

In August 2018, Malaysian Prime Minister Mahathir Mohamad cancelled the East Coast Rail Link (ECRL) and the Trans-Sabah Gas Pipeline (TSGP) projects, which were part of China’s OBOR initiative, saying his country’s top priority was to minimize its debt and loans.

Elaborating on the troubles besetting OBOR, a write-up in the Financial Times in July 2018 pointed out that 234 out of 1,674 Chinese-invested infrastructure projects announced in 66 Belt and Road countries since 2013 have encountered difficulties.

Chinese affairs expert Qian Benli, in an article published at the Committee for the Abolition of Illegitimate Debt (CADTM), an international network of individuals and local committees from across Europe and Latin America, Africa and Asia, has cited various news reports to ascertain the ill effects of OBOR, both on the domestic and international fronts.

Citing a report by Hong Kong-based website, Borderless Movement, Benli says OBOR has created negative effects in foreign countries, and led to neglect of China's domestic consequences including corruption, financial deficiency, the rise of xenophobia, among others.

ADVERTISEMENT

“It seems as though the ordinary people of China generally do not benefit from the expansionist strategy of the state; moreover, some of them are also the victims of the Chinese ruling class’ global ambition,” writes Benli in his detailed report.

China is taking over Zambia’s international airport after a debt instalment default, while Congo is in deep debt due to China-funded projects.

Further terming the launch of the OBOR as a hasty and reckless move, the author goes on to cite an analysis of projects published by Business Day to talk about the rise of Chinese President Xi Jinping, his party and the country and how it influenced the policy decisions.

“Before becoming General Secretary in November 2012, Xi was quite a mediocre figure in the party, and this probably was one of the reasons that induced the party elders to pick him. Thus Xi and his followers needed sound political and economic accomplishments to consolidate their power. Packaging all the existing overseas projects into a shiny new box under Xi’s name was a quick way to gain credit,” the article by Qian Benli reads.

It cites the website run by the Supreme People’s Procuratorate of China to ascertain its findings which claim that corruption occurs in the processes of decision making, examination and approval, land acquisition, and material procurement of the OBOR projects.

Citing chinanews.com, the write-up brings forward the fact that ‘due to the untransparent nature of China’s anti-corruption campaign and the authority’s efforts to protect the image of OBOR, it is very hard to acquire the details of OBOR-related corruption or prove rumors. However, 170 senior executives of China’s state-owned enterprises (SOEs) have been prosecuted by the authorities since 2013 and many of these SOEs have been involved in OBOR projects’.

“After terms are reached with a host country, funds are transferred directly into the Beijing-based bank accounts of China’s state-owned enterprises, which build the project often with Chinese materials. This is a model Beijing has employed extensively in Africa,” claims the author in the piece.

Quoting an article published by Foreign Policy, it brings forward the fact that although most of the cash will never leave China, the sheer quantity of equipment and materials, such as steel, concrete, and timber, needed to produce so many projects will provide ample opportunity for pilferage and other types of on-site malfeasance.

“Even if individual corruption is not considered, so far OBOR is making the state lose money rather than bringing back profits. Some political dissidents also argue that members of the Chinese ruling class are using OBOR as a mean of money laundering or even to secretly transfer national wealth overseas in preparation for their lives after the collapse of the CPC regime,” claims the author.

Further drawing a comparison between Military build-up and “Wolf Warriors”, the author outlines the details of project claiming that the mega construction and infrastructure projects China invests in overseas require the Chinese state to make considerable efforts to protect its assets and personnel from various direct threats such as pirates, local warlords and China’s rivals.

“If Beijing continues the expansionist strategy, it would have to spend more on the military build-up to protect its overseas interests However, in the current economic situation, further increasing military spending means cuts to education, social welfare or other public spending,” the write-up reads.

Citing a report by Xinhua, it highlights that ‘the rise of xenophobia reflects this dilemma faced by the party. In order to achieve the soft power building goal of OBOR, China now hosts a large number of international students from OBOR countries- in 2017, they numbered 317.2 thousand, or 64.85% of the overall international students in China. They enjoy much better government benefits than China’s domestic students, such as higher scholarships.’

It further quotes a report from toutiaosg.com, to give an instance of the fact that a lot of online speeches blame international students from Africa for having caused a large increase in AIDS cases in China.

Terming it a ‘Purge Instead of Prosperity’, the report further summarises the statistics by China Daily and Singapore-based Channel NewsAsia to establish that “the frontier and hub of the Silk Road Economic Belt (One Belt), which Beijing has promised to bring prosperity and stability to Xinjiang Uyghur Autonomous Region (XUAR). In some ways, this is being achieved. XUAR’s average annual GDP growth from 2012 to 2016 was 9.3 percent, higher than the national level. In 2017, investment in fixed assets in XUAR was the highest in China and more than 50,000 companies had been established or had branches set up there.”

Qian Benli also cites a report by The Diplomat and claims that the incidents of violence and terrorism have increased in XUAR in recent years, but they are largely caused by the displacement of Muslim communities and the ‘aggressive attempts to assimilate Uyghurs into Han culture through targeted educational and work programs that incentivise the learning of Mandarin and integration into the Chinese state’s vision of modernization’.

Recalling that this year marks the fifth anniversary of OBOR initiative, Benli also highlights the lack of benefit to the Chinese people through this project and writes, “They hardly ever mention any benefit brought back to the Chinese people. No figure about any relevant increases in terms of jobs, foreign exchange reserves or domestic living standards has been found.”

READ MORE:

Latest Comment

This so called expert or analyst intentionally spreading gloomy picture so as to classify the rivals. Even if other countries facing dept trap, China is nowhere losing money due to the clauses while giving loan.